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The nation's top securities regulator proposed new rules Thursday aimed at preventing the breakdowns in automated trading systems that have threatened to undermine investor confidence.

The proposal, known as Regulation SCI, short for systems, compliance and integrity, would replace an existing program under which operators of alternative trading systems and other financial organizations operated under voluntary standards not covered or enforced by formal SEC rules.

Formal rules are needed, several SEC commissioners said, citing the 2010 Flash Crash in which the Dow abruptly dropped 600 points before recovering, the August computer problem that triggered a $460 million loss for trading firm Knight Capital Group and technology glitches that marred Facebook's 2012 initial public offering.

In a unanimous 4-0 vote, the Securities and Exchange Commission proposed that certain alternative trading systems, self-regulatory organizations, clearing agencies and plan processors be required to design, develop, test and maintain the electronic systems that are integral to their operations.

While acknowledging that advanced electronic technology has improved trading markets, Commissioner Luis Aguilar said it has also led to breakdowns that showed the systems "can also become a destructive force, with devastating consequences."

"This evolution has increased the complexity of the markets and presented challenges for market participants seeking to manage their information technology programs and ensure compliance with our laws and rules," said SEC Chairman Elisse Walter.

The SEC proposal, which will now undergo a 60-day public comment period, would require system operators to establish procedures regarding the capacity, integrity and security of their networks, and take corrective action when disruptions occur. It would also require them to notify the SEC with detailed information when breakdowns occur or the systems undergo significant changes.

System operators would also be required to inform their members or participants about disruptions and the progress of corrective actions.